Category: Personal Loan

The Indian Government has released a number of relief packages in the wake of Coronavirus spread. But, only a little of that has reached the middle class. Thankfully, many banks have come forward to lend a helping hand in the form of COVID-19 personal loans. Not only is the process of loan application is easy, but the interest rates of these loans are also lower than other personal loans.

What are 'COVID-19' personal loans?

Many banks and non-banking financial companies (NBFCs) have started to give a special type of loan. Named after the pandemic virus, these loans are called COVID-19 personal loans. The difference between a regular personal loan and a COVID-19 personal loan is that the latter's rules are somewhat relaxed.

The interest rates of regular personal loans start from 12% and go up to 20%. While the interest rates of COVID-19 personal starts from only 7% and goes up to 10%.

Right now, Bank of Maharashtra, Punjab National Bank (PNB), Indian Overseas Bank (IOB), Bank of Baroda (BoB), Indian Bank, Union Bank of India, UCO Bank, State Bank of India (SBI) and Bank of India are providing the facility of COVID-19 personal loans.

Eligibility Criteria

Different banks have different eligibility criteria. But, most of them have some commonalities. Like, you must have a salaried account or personal account with the bank. And, you must have an excellent CIBIL score.

In case you have already taken a loan with the bank, your repayment history must be good enough. Some of the banks are giving COVID-19 personal loans only to the customers who already have borrowed home loans.

Those who are self-employed can get a loan of limit up to 50% to 60% of their last filed profit, while the salaried persons can get loans of limit up to 10x of their monthly salary.

Should you take the loan?

The classic answer- Yes and No. If you are in dire need of it, you can opt for the COVID-19 personal loan. But, if you are taking the loan just because the interest rate seems lucrative- it's a big NO-NO.

The interest rates of these loans are indeed quite reasonable, but you still have to pay that in the future. You don't know when this crisis will end, and when will your business or job will get back on track. Do not pay interest rates to banks for a time period that is unknown to you.

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Less informed about guarantors in personal loan? Read here for full detail

As you know personal loan is an unsecured kind of loan which never needs a security or collateral to lend you money. But, you may be asked for a guarantor sometimes to get the loan approved. This majorly happens when the bank is not fully satisfied with the credit repayment ability and financial worth at the time of loan application’s approval status. When a bank has a guarantor for your personal loan, it can have him/her to cover the loan repayment in case you (primary borrower) fail to do so.

Therefore, a guarantor is someone who guarantees the borrowers capability of repaying the loan taken. She/he doesn’t only verify the borrower’s identity but is responsible for the repayment of the loan as well.

Below are some cases when a bank may ask for a guarantor from your side:

• Primary borrower’s credit history is not satisfying.

• Job is unstable or temporary

• Less impressive academic background

• Irregular income

• Frequent transfers to different cities for job

Mostly, all the banks and other financial institutions have their own set of conditions and norms of loan guarantors. In most of the cases, they ask for somebody who has stable income with a secured job. This is to recover the loan amount in any event of default or inability to repay it on time. Banks often consider the borrower and guarantor are from the same organization so that their employer could be coordinated in case of any disagreement or default.

Apart from the above, the personal loan lender organizations have the following guarantor requirements to be fulfilled before the loan application gets approved:

• The minimum age eligibility is 18 years

• Good CIBIL score and repayment record

• Should be in the best state of mind, not forced or tricked into the guaranteeing of the loan

• Knowledge of the borrower’s loan amount, tenure and accumulated gratuity, interest rate and monthly EMIs etc.

• Guarantors are to be given the loan copies, right to legal advice before signing the agreement

The after effects of being a guarantor are important to know before being one. If you are blindly agreeing on being a guarantor to your friend without even knowing the details, you may be directed towards paying a heavy price for that. When a default case happens, the banks wait for quite a time before sending a legal notice to the guarantor to repay the amount borrowed by the primary borrower. If you deny the repayment agreement signed at the time of loan approval, you will be considered and termed as ‘willful defaulter’ and your credit score will definitely be at stake. Your denial will throw an adverse impact on the credit behavior report sent by the bank to the financial regulatory authorities. So, be careful and safe while being a defaulter for even the closed ones.

It's never a fun task to go from pillar to post to collect funds. After all, scrounging for money can lead to one sleepless night too many. How much has your vacant bank account or all the unpaid debts that have accumulated over the years been moving?

Well, for a personal loan you could always apply. Today, it is easier than ever to secure a personal loan, as the whole process is totally unpapered and your loan can be approved with a few days.

However, if the interest you have to pay for the loan scares you, you can borrow money here other ways without worrying about the interest spectre above you.

• Asking friends & family: While borrowing money of friends and family can be bit of a hesitation, ' it is likely time to swallow your pride and ask them to rescue you from your difficulties if you are financially in the dumps. While you're here, some grovelling might go a long way too. Usually your friends and family will help you more often than not financially and will probably not ask you to pay interest on the amount you borrowed unless it's a bunch of thieves. They also allow you to refund the amount for a significant period of time, which can give you the leeway to get back on track with your finances.

• Getting a credit card: You can use your Credit Card to make payments or purchases without paying an interest jackpot on your expenditure, whether you believe it or not. Well, it's really quite simple if you're wondering how. Credit cards give you a free interest grace period that begins with the purchase with the card, until the minimum payment has been due. The duration usually varies between 21 and 28 days. During that time, you can make payments and purchases by using your credit card without any interest.

• Balance transfers: Balance transfers are great ways to borrow money for an extended time frame without paying any interest on the amount. Check out a credit card with a rate of 0 per cent for the first 6 to 12 months or beyond. These are usually introductory rates that are offered to entice customers to make the switch from one Credit Card issuer to another.

Are you an NRI wanting to send your kids to India for studies? We will tell you how you can get an education loan!

In India, educational institutions have a NRI quota system. However, the catch is that the fees for resident students are higher. If this is the area of concern, an educational loan for NRIs can be taken care of.

What is the objective of NRI Education loan?

The goal is to meet the costs of tuition, admission, books, equipment and maintenance. The scheme also allows the financing of deposits.

Features

• A quantity of Rs for studies in India. It's going to be 4 L–20 L. Indian citizens and students who passed the entrance test or have secured entry are eligible for the course

• Eligible courses include computer courses by Department of Electronics institutions, all technical and professional courses, post-graduate and/or doctoral study courses in recognized schools, colleges and institutions. 

• Eligible courses include: For example E.g. Medical, agri scientific, veterinary, dental, architectural, computer science, industrial, business administration, etc.

• Examination costs covered by the loan would include fees payable.

• Refund: The student should begin his / her return immediately after the completion of the course for a period of one months from the date of employment, if he or she is employed at least six months after the end of the course. 

• Maximum loan repayment time: the loan to be repaid within 5-7 years following the beginning of the repayment. The maximum period of two years may be permitted if the student cannot finish the course within the time set out for finishing the course.

• If the student cannot complete the course for reasons beyond his control, the authority may consider such extensions at his discretion.

If you are a NRI and want to return your child to India for studies and you need funds, the NRI loan could help to resolve your troubles.

During a crisis such as a financial crisis or a medical emergency, your Personal Loan may cover you. It can help you to cover unforeseen expenses when you are married to a family. Don't be surprised if you meet someone who plans to receive a home renovation personal loan!

Are you looking to get a personal loan? Let us begin by asking these questions:

What’s the purpose of getting the loan?

A personal loan is a loan that is multi-functional. It is up to the borrower to use the money. Ask yourself, therefore, whether it is worth the loan.

If you have difficulties in repaying your credit card dues, consider receiving a loan and canceling your outstanding payment. Make sure to check whether the credit card interest is far higher than the loan interest!

Before you take a personal loan, analyse your needs carefully. After you take a loan, you are required to pay the amount borrowed in the form of Equated Monthly Instalments( EMIs) like the financial commitment and religiously.

What’s the eligibility?

Whether you qualify for an individual loan depends on many factors, your age, your income and your credit scoring are critical. Before applying it is wise to verify your eligibility so that you get an idea of the highest money limit you might be asking for.

Don’t make the mistake of submitting multiple applications! Be aware that too many loan applications may give lenders the feeling that you are not reliable. This is one of the main factors that decrease your credit score.

What’s the amount of loan you need?

The loan amount you need will be determined by your purpose. However, the personal loan amount you need and the eligibility for the loan may be different. Borrowers often request more than they need in some cases. Also, make sure to check the rate of interest before you apply.

This is one of the key questions before you get any kind of credit. In majority of cases, borrowers tend to opt for a longer repayment period with the hope that smaller EMIs will be paid. What they tend to overlook is that they finally pay more than they borrow while keeping the EMI smaller.

This is because of the compounded calculation of the interest on the loan. The higher the amount you pay the longer the tenure is. Start by testing our EMI calculator for personal loans!

So now don’t let your financial problems bring you down, apply for a personal loan now! Are you looking for other financial services and products? Don't look any further, because we b  have a host of options!

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You must be astonished to see the title that personal loans give you tax benefits. But, this is true. If you utilize the personal loan funds in some specific purposes, chances are you get tax exemption. Now, let us know about those utilizations you can make out of your personal loan money.

Personal Loan as home loan repayment: You might be knowing that home loans are eligible for tax benefits under Section 80C and Section 24. The former lets you claim your repaid principal up to Rs. 1.5 lakhs and the latter offers a tax deduction for repaid interest up to Rs. 2 lakhs respectively. It is also a myth that only a home loan applies to tax benefits. You can also apply for the same when you buy a house with the amount you get as personal loan. You are eligible for tax exemptions just as the case with home loan. Keep in mind that you need every proof regarding the amount used to buy a house to get tax benefits. Even if you are using money gifted to you by your friends and family to buy a house, keep all the proofs handy.

On the other hand, if you have not still constructed your house and already taken the personal loan for the same, you shall only be eligible to claim tax benefits only after the completion of your house.

Personal loan for house renovation:

Same tax benefits are offered if your house is under renovation, repairs and improvements. For example, you are building a balcony, an extra room, painting and denting, extending another floor to your house, improved flooring, tiling etc are included in home improvement loan which you can apply for. Even the alarm system and plumbing tasks are covered in some cases. For this, you will be given benefits under Section 24 and not Section 80C. You can claim benefits up to Rs. 30,000 for the renovation tasks of self-possessed house/property. For rented out property, this limit is up to Rs. 2 lakhs annually.

Personal loan for businesses:

If you own and run a business, took personal loan for the development of it; claim the interest amount as an expense to get tax benefit. The business profits will be deducted and this way, your taxes will get reduced. In case you want to use Personal Loan amount in buying assets like shares and equities, it will be further added to the acquisition cost and lessen the tax burden.

Therefore, you now know that personal loan can be indirectly used to avail tax benefits by putting it into specified purposes, you must use it wisely to claim the tax benefits. One thing is to be kept in mind that personal loan attracts higher interest rate along with lengthy terms and conditions which you must consider with multiple loan lenders before applying for one.